Peter Diamandis is, I think it’s fair to say, an optimist.
After all, how many other space-obsessed kids ended up founding an International Space University? Or inaugurated an XPRIZE, to inspire a new generation of passenger spacecrafts?
But Diamandis’s current obsession is entrepreneurship, and the idea that the economy is radically shifting to accommodate a new generation of geniuses with cheap laptops and basement offices. I spoke recently with Diamandis, the co-author of Bold: How to Go Big, Create Wealth, and Impact the World.
[This interview has been edited and condensed. For the full conversation, visit innovationhub.org.]
Kara Miller: In working on your book, you did a billionaire survey. Is there something that you found that the most successful people have in common?
Peter Diamandis: Yes. There are a few things they have in common. And luck is definitely one of the things. But besides that, it’s a way of viewing the world. It’s a much more optimistic view of the world. Most of these people are optimistic thinkers, and they are willing to take big shots. It’s what my friends at Google X call moonshots. Successful people aren’t thinking about going 10 percent bigger, but they’re thinking about going 10 times bigger.
KM: What personal advice would you give to someone starting a business?
PD: The personal advice that has been true for me is that any time that I’ve tried to start something just to make money or because someone told me to, it’s either failed or it’s not been fun. My number one piece of advice that I’d give to anyone is to do what you love doing and what you’re passionate about. You can make a dent in the world, and you can make a business out of anything these days.
KM: Do you worry that the emphasis put on entrepreneurship takes great talent from big companies like Facebook, AT&T, and GE?
PD: We have to change our mindset that the person we hire sits at the desk next to us. That person may live across the planet and still be a brilliant individual. For example, a couple of my friends at Stanford put their Artificial Intelligence course online, and they opened the curriculum so that anyone could register. They ended up getting tens of thousands of people, and many of them took the final exam—along with Stanford students in the class. The top Stanford student ranked 832, so the top 831 were from other parts of the world like Asia, Africa, and India. We might find talent someplace else around the world, so I’m not worried about stealing talent.
KM: When you think about the tech world, a lot of power, we hear about a lot of big thinking from people like Elon Musk, Peter Thiel, and Jeff Bezos. But how important is it to disperse that power a little?
PD: We see a lot of people being extraordinarily successful. I advise hundreds of entrepreneurs, and it is amazing what you can do as an entrepreneur. I’ve done two crowdfunding campaigns. I teach people how to raise $1,000,000 in crowdfunding, which is non-dilutive, or how to create incentive competitions to design your next product or software or service. So I think it is important for us not to depend on Larry Page, Peter Thiel, or Elon Musk for funding. No one needs them. You have access to 1000-core processors on Amazon Web Services. The fact of the matter is that mindset is the most important thing.
KM: But aren’t people limited by lack of connections or by the amount of great ideas that can be launched each year?
PD: There are an innumerable number of great ideas. When people are looking for great ideas, I tell them to go ask people about the biggest problem they have in their life or company. And then go and solve that problem. Problems are like goldmines. If you’re saying there are no great ideas, it’s like saying there are no problems left. When we have no problems left, then we are out of great ideas.
Tricia Breton contributed to this write-up.Comments | Reprints | Share:
UNDERWRITERS AND PARTNERS
By now the 2014 data for venture capital investments from the most important regions of the world have been compiled and disseminated. When laid out next to each other, some fascinating themes emerge.
It’s no surprise that the U.S. continues to set the pace with over $48 billion invested in 4,356 companies, compared to 2013, when nearly $30 billion went into in 4,193 companies, according the National Venture Capital Association’s MoneyTree Report. Overall, the average size per deal increased from $7.1 million to $11.1 million in 2014.
But when one looks closer, the rotation from seed and early stage deals to expansion stage investments was quite dramatic—41 percent of all capital invested in 2014 was in expansion stage companies, as compared to 33 percent in 2013. The average round size of expansion stage investments spiked to $17 million from $9.5 million in 2013.
This underscores a significant development in the venture capital market—companies are raising larger later stage rounds and staying private longer.
Arguably, venture investors are generating greater overall returns by encouraging portfolio companies to stay private longer. In 1986 Microsoft went public at a $500 million valuation and traded to over $3 billion within the first year (and then increased 30-fold over the next 8 years). Google went public in 2004 at a roughly $25 billion valuation and traded to over $80 billion after its first year. Facebook went public in 2012 at a $100 billion valuation and, after some hits to its stock price, recovered its IPO valuation nearly 15 months later. And of course, Alibaba went public at a $225 billion valuation and now trades slightly lower, with a market cap of about $210 billion. These are only a few of the most notable success stories, but they demonstrate a company’s ability today to raise very large private rounds of capital to fund hyper-growth, affording early stage investors much more of the upside.
Against this backdrop, though, there is an explosion in the number of early stage companies being formed, and many of them are not raising traditional venture capital.
In 2014, over $718 million was invested in 192 seed stage companies by venture firms. That compares with more than $1 billion that VCs invested in 235 seed stage companies in 2013. Crunchbase had over 25,000 companies in its database in 2008; today that number is converging on 700,000, and a very small percentage of them raised capital from VCs. With fewer active venture capital firms nowadays, one might argue that the VC industry may not be well-positioned to provide seed capital. Maybe VCs are not able to compete as effectively against other sources of capital, such as incubators and super angels? Or maybe VCs are simply being more discerning, given the lack of differentiation between so many look-alike startups?
Shikhar Ghosh, a Harvard Business School senior lecturer, recently studied 13,500 venture-backed companies to see how many failed to return 100 percent of their capital to first-round investors, and the results are disturbing.
Since 1990, 76 percent of the companies in this study failed to return 1x to first-round investors (82 percent in the 1996-2000 vintage were particularly guilty of that). Even more troublesome (although perhaps not that surprising), in cases when the founder was fired, 90 percent of the companies failed to return all the capital invested by first-round investors. According to Pitchbook, 40 percent of all VC-backed exits in 2014 amounted to more than $100 million, which means one of two things (or both): Most of those returns went to later stage investors, or the capital loss rates for the other 60 percent of those exits in 2014 must be very high. In other words, many of those companies sold for much less than invested capital.
Here are some other … Next Page »Comments | Reprints | Share:
For sheer volume, San Diego carries the week’s West Coast biotech news, with everything from trial failures (Lpath, MEI Pharma) to stock sales and deals (Retrophin, Vical, Mast) to good product news (Orexigen, Conatus). For scientific impact, however, Amgen tips the scales with the big publication of Icelandic genomic data from its subsidiary DeCode Genetics. Meanwhile two Bay Area firms, Calico and Avalanche, have built ties to academic institutions. All this and much more in the roundup, so let’s get to it.
—deCODE Genetics, the Icelandic subsidiary of Amgen (NASDAQ: AMGN) of Thousand Oaks, CA, published four papers in Nature Genetics that paint a complex portrait of the genetic variation of the Icelandic people. The researchers sequenced the whole genomes of more than 2,500 Icelanders and did partial studies of 104,000 more. The work sheds light not only upon the general field of genomic studies but also upon the function of the Y chromosome, the prevalence of people who are missing certain genes, and a particular risk for Alzheimer’s disease.
—Calico, the South San Francisco, CA, startup backed entirely by Google, said Tuesday it would fund aging-related research at the University of California’s QB3, which has built a network of scientists and entrepreneurs from three UC campuses and private industry. The four-year partnership gives Calico the option to take exclusive rights to discoveries that stem from certain Calico-QB3 collaborations.
—Avalanche Biotechnologies (NASDAQ: AAVL) of Menlo Park, CA, and the University of Washington in Seattle are teaming to develop treatments for color blindness. Researchers Jay and Maureen Neitz are using Avalanche’s gene therapy technology in their lab and have joined the company’s scientific advisory board.
—GlaxoSmithKline (NYSE: GSK) has opened an office in San Diego, a physical footprint for its business development team. It follows two years after GSK inked a deal with San Diego’s Avalon Ventures to jointly fund up to 10 brand-new startups scouted by Avalon.
—San Diego oncology firm MEI Pharma (NASDAQ: MEIP) lost over two thirds of its market value Monday after it said its lead cancer drug, pracinostat, failed to meet the primary goal of a mid-stage study for myelodysplastic syndrome (when the bone marrow doesn’t produce enough healthy blood cells). MEI was previous an Australian firm known as Marshall Edwards, which moved to San Diego in 2010 to reboot following the failure of its late-stage ovarian cancer treatment.
—More bad clinical news from San Diego: Lpath (NASDAQ: LPTN) said Tuesday that a mid-stage trial of its therapeutic antibody drug Asonep failed to meet the main goal in a study of patients with advanced renal cell carcinoma. Lpath shares fell 23 percent.
—Hans Bishop, CEO of Juno Therapeutics (NASDAQ: JUNO), and Arch Venture Partners cofounder Bob Nelsen, both of Seattle, penned an op-ed in Forbes this week arguing against proposed changes to U.S. patent law.
—Seattle’s Institute for Systems Biology announced Thursday a three-year project to delve into the biology of Lyme disease and develop diagnostics.
—Mast Therapeutics (NYSE: MSTX) of San Diego has filed for a secondary stock offering that would raise $167 million. The company will use the proceeds to continue developing treatments for impaired microvascular blood flow and sickle cell disease.
—New York and San Diego-based Retrophin (NASDAQ: RTRX) raised nearly $150 million from an offering of nearly 8.9 million shares. Of the cash, $27 million will go to Asklepion Pharmaceuticals to help pay for a drug Retrophin acquired when it bought the Baltimore, MD company last week.
—Vical Therapeutics (NYSE: VICL) of San Diego said Wednesday it has bought from Astellas Pharma the rights to a preclinical treatment to fight Aspergillus fungal infection. Vical is paying Astellas $250,000 in cash and about 1 percent of its stock up front. It could end up paying Astellas up to $100 million if the drug ever comes to market.
—Nightingale, an alumnus of Bay Area accelerators StartX and Y Combinator, launched its eponymous app that provides data management and analysis for health providers caring for autism patients. The group, led by a recipient of a Thiel Fellowship grant, will soon expand the app to let parents enter and gain access to data.
—San Diego’s Conatus Pharmaceuticals (NASDAQ: CNAT) said a mid-stage trial of its emricasan, its drug for patients with nonalcoholic fatty liver disease (NAFLD) and nonalcoholic steatohepatitis (NASH), met its primary objective. The drug blocks a signaling pathway that triggers programmed cell death and inflammation, believed to drive the progression of liver disease.
—More San Diego dealmaking: The city’s Biocept (NASDAQ: BIOC plans to combine cancer diagnostic technologies with Israel’s Rosetta Genomics (NASDAQ: ROSG). Biocept specializes in technology used to analyze biomarkers of cell-free circulating tumor DNA. Rosetta specializes in microRNA-based diagnostics.
—San Diego’s Allele Biotechnology & Pharmaceuticals agreed to provide its technology for generating human induced pluripotent stem cells to Marlborough, MA-based Ocata Therapeutics (NASDAQ: OCAT), a specialist in regenerative medicine for ophthalmology.
—Amgen will appeal a court’s ruling that Novartis (NYSE: NVS) can proceed with sales of Zarxio, a biosimilar version of Amgen’s white-blood cell booster Neupogen, Reuters reported Wednesday. Zarxio was the first biosimilar to receive FDA approval.Comments | Reprints | Share:
After establishing a “first-of-its-kind collaboration” with San Diego’s Avalon Ventures in 2013, the British pharma giant GlaxoSmithKline (GSK) has opened a small office in San Diego to manage its R&D partnerships and to prospect for more deals on the West Coast.
The move reflects an effort by GSK to get closer to the scientific innovators in the life sciences, according to Damien McDevitt, a GSK vice president of business development who heads the new satellite office off North Torrey Pines Road. GSK set up a similar outpost last year in Kendall Square, the Cambridge, MA, neighborhood that has become the pharmaceutical industry’s East Coast hub and is close to Harvard, MIT, and the Broad Institute.
In San Diego, the GSK office is in a prestigious zip code that includes The Scripps Research Institute, Salk Institute, Sanford-Burnham Medical Research Institute, and Sanford Consortium for Regenerative Medicine—with UC San Diego and scores of biotech startups in close proximity.
During an open house for dozens of San Diego life sciences leaders, McDevitt said GSK currently has more than 25 strategic collaborations on the West Coast, including deals with Isis Pharmaceuticals and Regulus Therapeutics in the San Diego region, and Theravance, Gilead, and Five Prime Therapeutics in the Bay Area. “We used to just set them up, and run them from the U.K. or Philadelphia” (where GSK’s U.S. headquarters is located), McDevitt said. “Being on the ground [here] enables you to be in those conversations earlier.”
Before waves of consolidations reshaped the pharmaceutical industry, in-house scientists carried out much of the research at big pharmaceutical companies. But external collaborations with smaller companies have become more critical to GSK’s overall R&D strategy over the past 10 or 15 years. The idea is to find breakthroughs in biomedical research, and to help advance the R&D needed to create innovative medicines.
GSK’s deal with Avalon is an example of an emerging model that enables a Big Pharma to work more closely with life science VCs to launch biotechs at low cost and get them quickly to a proof-of-concept stage. Through their collaboration, GSK and Avalon have jointly funded three new San Diego startups so far: Sitari Pharmaceuticals, Silarus Therapeutics, and Thyritope Biosciences. The partners have funded a fourth startup that has not yet been announced, and are working out the details for two more, according to Avalon partner Jay Lichter.
Under a separate deal with Sanderling Ventures, the life sciences firm based in San Mateo and San Diego, GSK also agreed in 2013 to invest $50 million in a $250 million fund at Sanderling.
While GSK has only about eight business development executives on the West Coast, McDevitt said he views the San Diego office as “a portal into the rest of GSK. Through our video teleconference system, you can talk with our collaborators anywhere in the world.”
The GSK team is primarily focused on forging drug development partnerships with academia, venture firms, and biotech startups, McDevitt said. What small companies with great ideas often don’t understand is the clinical and regulatory path to commercializing a drug.
What GSK provides, he said, is access to GSK’s capabilities in high-throughput screening for drug candidates, chemical and pharmacological assessments, and deep knowledge and experience in clinical development and how to get a new drug to market.Comments | Reprints | Share:
Biotechnology leaders—and the rest of us—should “count to 10” as they read the March 19 call in Science to consider limits on using revolutionary new gene-editing techniques for germline gene therapy. The techniques are powerful and simple to use and key scientists, worried about misuse, want us to pause, confer, and set limits. But we must also recall the risks on the other side: turmoil and distrust of science.
As the writer of the first newspaper story about recombinant DNA gene-transfer back in 1974, and one who covered the famous international conference at Asilomar in February 1975 (both for The New York Times), I think we should remember how life sciences passed through several very parlous years four decades ago, where major potential human benefits walked a knife edge between outright bans and an evolving set of rules that allowed an industry to struggle and grow.
Public discussion of such issues is required in a democratic society, but we must ensure a rational discussion in today’s even more contentious public forums.
Last week’s letter to Science by leading biologists, urging discussion of regulating so-called CRISPR-Cas9 gene-editing technology, creates a new “Asilomar Moment.” Appealing to the community of researchers in the field, the authors are following a pattern set in biotechnology and life sciences 40 years ago.
The manifesto focused on the new opportunities for altering genes so that the changes can be passed on to future generations. It was entitled, “A prudent path forward for genomic engineering and germline gene modification.” Its 18 signers asserted, “A framework for open discourse on the use of CRISPR-Cas9 technology to manipulate the human genome is urgently needed.”
They wrote of “unparalleled potential for modifying human and nonhuman genomes,” to cure genetic diseases in humans and to “reshape the biosphere.” They warned of consequent “unknown risks to human health and well-being.”
As in 1974, when gene-splicing or gene-transfer techniques sped from lab to lab, the authors noted that the new “gene editing” techniques that emerged in 2012 are spreading widely. The trends led them to meet in Napa, California, in January to hammer out their case, just as their predecessors did in David Baltimore’s office at MIT on April 17, 1974.
A Nobel Prize winner in 1975 for his work with retroviruses, Baltimore is the former president of Rockefeller University, California Institute of Technology, and the American Association for the Advancement of Science. He was also lead author of last week’s Science letter. Among the signers were Harvard University’s George Church and Jennifer Doudna of the University of California at Berkeley. Both are pioneers in developing CRISPR-Cas9 for use in human disease therapy.
Baltimore and another signer, Nobel Prize winner Paul Berg of Stanford, were principal organizers of the February 1975 world conference at Asilomar in Pacific Grove, California, that considered management of risks from the then-new techniques of recombinant DNA.
The gene-transfer techniques were pulled together by Herbert Boyer of UCSF and Stanley Cohen of Stanford. Their methods were reported to nucleic acid researchers at a Gordon conference in New Hampshire in June 1973. Concerned about risks, attendees voted to send a letter to Science and to ask the National Academy of Sciences for a study. Berg headed the resultant committee that met in Baltimore’s office in April 1974. Recommending a moratorium on three types of experiments until the Asilomar conference could consider the matter, the committee’s letter was made public July 18, 1974.
I learned of Boyer and Cohen’s work in April 1974. It was published in May 1974, in the Proceedings of the National Academy of Sciences. That was when my Times story appeared on the front page of the national edition. Niels Reimers, Stanford’s director of technology licensing, told me later that this spurred him to talk to Cohen about what became the famous Boyer-Cohen patent.
I recall the Asilomar conference amid the pines on the Pacific shore as an incredibly tense week, while young scientists whose careers were in the balance … Next Page »Comments | Reprints | Share:
Internet speeds are becoming increasingly important to consumer markets, as users of streaming content such as Netflix, Hulu, and HBO multiply. Those people are expecting quality streaming, too, especially with the advent of 4K, or “ultra” high-definition, video.
It may be no surprise that broadband Internet speeds vary from state to state, with Virginia, Delaware, and Washington, DC, leading the way with the fastest average connection speeds, according to Akamai’s (NASDAQ:AKAM) most recent “State of the Internet” report. The Cambridge, MA-based company also provides a rating of how prepared each state is to support Internet speeds required to provide 4K screen resolution, which has more than 8 million pixels, or four times the current standard.
Akamai, which published its fourth quarter 2014 report Tuesday, considers broadband speeds of at least 10 to 20 megabits per second necessary to stream video with 4K quality. It measured each state’s 4K readiness based on the percentage of the state that has fast enough speeds to handle the ultra high definition—in essence, speeds above 15 megabits per second.
So, which state is most prepared? Delaware, with 38 percent of it having concentrations of “4K-capable” connectivity. The top five includes Rhode Island and Massachusetts (30 percent), Virginia (28 percent), and Washington, DC (27 percent), according to the report.
Akamai makes it clear that it is not indicating which states can or cannot stream 4K-quality video, merely which ones are most capable of doing it when it becomes possible. The three states with the lowest readiness: Alaska (7 percent), Hawaii (7.2 percent), and Kentucky (7.3 percent).
Average broadband speeds increased across all 50 states and Washington, DC, in the fourth quarter, Akamai said. Still, the fastest average speeds, such as the 17.7 megabit-per-second speed in top-tier Virginia, barely reach the “ultra” high-definition connectivity needs. That may not be too problematic right now, according to one article on CNET, which notes that standard TVs may be too small for such dramatic pixelation.
It’s not just demand from video streamers that’s attracting interest in 4K, though. More people are also seeking higher definition for gaming, and television makers are offering higher-resolution products, such as a $24,999, 77-inch Ultra HD TV made by LG Electronics, as my colleague João-Pierre S. Ruth has reported.Comments | Reprints | Share:
San Diego-based Huntington Capital, which provides debt and equity financing to private, small-to-mid-size companies, said it has raised $91.7 million in capital commitments for its third fund.
The firm raised $78 million for its previous fund in 2008, and Huntington says it has raised more than $210 million in total capital commitments for its three funds since the firm was founded in 2000. Huntington says it has invested in approximately 50 companies throughout the Western United States.
Huntington targets lower-risk deals with well-established companies that need between $2 million and $9 million in capital, and that generate annual revenue of $10 million to $75 million with positive cash flow. The firm usually eschews investments in riskier, early-stage technology startups.
Nevertheless, the firm has made a number of investments in technology-based companies, such as Park City, UT-based Datashield, which provides data security services; Tigard, OR-based Epis, which provides utilities with software and ready-to-use data that is used to forecast wholesale electricity market prices; and Irvine, CA-based Resolve Systems, which automates the process of resolving incidents on IT networks, enabling quicker resolution of customer problems.
Huntington has been making investments from Huntington Capital Fund III L.P., and lists seven portfolio companies on its website, including Datashield, Epis, and Resolve Systems.
In a statement, Huntington also notes a growing emphasis in the emerging area of “impact” funds that both earn favorable returns and help companies produce a positive social impact. The firm says 80 percent of the investments from its third fund help increase the number and quality of jobs for low- and moderate-income individuals.
In the statement, managing partner Morgan Miller says, “It’s important to provide capital that results in sustainable financial performance and enhances the skills and quality of life of the workforce.”Comments | Reprints | Share:
Cyanogen, the mobile operating system developer attempting to rival Google and Apple, is planning to make new hires and further develop its open platform after receiving $80 million of Series C funding.
Its new investors are a mix of high-profile individuals, as well as A-list companies and venture firms. Premji Invest, the venture arm of Indian IT billionaire Azim Premji, led the round, which includes investments from Twitter’s venture branch, San Diego-based Qualcomm (NASDAQ: QCOM), Telefónica’s venture business, and Rupert Murdoch, among others.
“Cyanogen is well positioned to become the third leading mobile OS, and we’re excited to back them in growing their business on a global scale,” said Sandesh Patnam, technology sector Lead of Premji Invest, in a statement released Monday.
The company, which has offices in Seattle and Palo Alto, CA, built its open-source operating system based on the Android platform developed by Google, and intends to be a direct competitor for operating systems such as Google’s version of Android and Apple’s iOS. Having received $110 million in total funding since it was founded in 2013 (founder Steve Kondik started work on the system in 2009), the company said it has several yet-to-be-announced partners as it builds an operating system that is open and customizable for the user.
Cyanogen is working on having some basic apps already installed, according to Forbes, which first reported the news. The company is may create a partnership with Microsoft that would take advantage of multiple services from the software giant, including include tools such as search engine Bing, Outlook, and Skype, among others, Forbes reported, citing sources. Cyanogen also plans to sell a smartphone with those services included later this year, Forbes reported.
Cyanogen’s other investors in this round include Smartfren Telecom, Index Ventures, Access Industries (the US-based industrial group headed by Len Blavatnik), and Vivi Nevo. Previous investors Benchmark, Andreessen Horowitz, Redpoint Ventures, and Tencent Holdings also participated in the new round, the company said.Comments | Reprints | Share:
Given the investment horizons for venture capitalists, we do not necessarily try to time public markets when making new investments—although they obviously influence pre-money valuations, particularly for later rounds. Greater concerns revolve around portfolio companies’ ability to access capital on reasonable terms, and that the general macroeconomic environment is conducive to strong revenue growth. Notwithstanding the confusing economic signals that abound today, conditions continue to be supportive for new company creation, particularly in the healthcare tech sector.
Call it the “fastest turtle.” The U.S. economy continues to be one of the most robust and attractive markets in the global economy, despite the fact that 4Q 2014 GDP growth was recently revised downward to 2.2 percent from an initial estimate of 2.6 percent, which is significantly down from 3Q 2014 growth of 5 percent. Arguably the dramatic decline in the price of oil has yet to be fully reflected in consumer spending, although consumer sentiment has meaningfully improved over the past year, bolstered in large measure by the relatively low unemployment rate of 5.5 percent.
The current environment is complicated and quite confusing, though. There remain significant and disturbing geopolitical risks: Russia’s aggressive and blatant expansionist activities in Ukraine and elsewhere; the barbaric and senseless behavior of ISIS; and the looming Greek debt crisis. On top of such factors, given high European unemployment and all of the attendant social unrest that is causing, there is the need for the European Central Bank to take steps toward quantitative easing. All of these risks will obviously impact domestic economic activity.
There now is the specter of rising interest rates in mid-2015. After a nearly 6-year period with targeted fed rates between 0-0.25 percent, Fed chairwoman Janet Yellen recently signaled that rates may rise to be 2.5 percent by year-end 2016. This is particularly notable given that the Fed’s balance sheet now stands at approximately $4.5 trillion as compared to $1 trillion in 2008. Arguably, since 2000, the U.S. economy has experienced steadily declining interest rates (as well as two difficult bear markets), which has now sparked another emerging concern: the under-funded status of corporate pension funds. Pension fund managers are in the business of matching their assets and liabilities, which has been particularly difficult over the past decade as fixed income yields are effectively zero. With the dramatic improvements in healthcare, pensioners are living longer, often outstripping their assets to cover healthcare costs. Estimates are that domestic pension funds are underfunded to the tune of $800 billion, which is comparable to the size of the infamous TARP (Troubled Asset Recovery Program) of the Great Recession.
Broader equity valuations are also cause for increasing concern. Investor sentiment has quite clearly moved from positive to neutral this past quarter, even in the face of consensus analyst GDP growth for 2015 between 2.5-3 percent. Currently the S&P 500 index trades at 17.5x trailing earnings, which is well below the “bubble territory” of 25x witnessed in 2000, yet the NASDAQ has just eclipsed 5000 and other public equity indices are regularly setting all-time records. The U.S. stock market trades at 155 percent of GDP, comparable to 2007 levels. Arguably, private equity valuations for break-out companies have never been higher, causing consternation among many later-stage private investors.
Broadly, there are a handful of powerful and disruptive themes evident in the healthcare technology marketplace today: (i) the shift to risk from fee-for-service (aka “volume to value” whereby providers are assuming more of the responsibility for clinical outcomes at lower costs); (ii) tiered and innovative new healthcare delivery models; (iii) the role of the patient as a consumer of healthcare services; (iv) the demand for mobile-based 24/7 solutions; and (iv) novel “diagnostics” that include many different variables, not just DNA or protein biomarkers but possibly even your FICO score or zip code. And there are many other themes – each one potentially creating exciting and valuable new companies.
The Agency for Healthcare Research and Quality recently reported that 1 percent of all patients account for 22 percent of all hospital costs, which calculates to nearly $98,000 of annual costs incurred per patient in this 1 percent. Notwithstanding that Medicare spending “only” grew at 3.4 percent in 2013, important initiatives across the entire healthcare ecosystem are being adopted to drive down costs and improve efficacy. This environment continues to hold great promise for new and valuable healthcare businesses focused on technology infrastructure to be created over the next decade.
As of year-end 2013, nearly 190 million people in the U.S. (or ~60 percent of the population) were covered by private health insurance. Due to Obamacare, more than 10 million new members enrolled, taking the uninsured rate down to 12.4 percent in 4Q 2014. Consumer out-of-pocket spending (co-payments, deductibles, services not covered) was $339 billion, or approximately 12 percent of the national healthcare spending in 2013. Clearly the growing role of the patient as a consumer is a powerful force as healthcare models are transformed.
Other pressures are increasingly evident, such as the fact that over 257,000 doctors incurred 1 percent Meaningful Use penalties for failure to comply. As financial incentives become more apparent, expect changes in behavior and increased adoption of new solutions. According to Healthcare Growth Partners (HGP), nearly $1 of every $4 spent in hospitals was spent on overhead. HGP further observed that the U.S. ranks #46 out of 48 countries in healthcare efficiency, just one rank behind Iran. As greater transparency of actual costs incurred becomes more evident, expect increased investment in healthcare IT infrastructure to better manage new risks and revenue streams.
The Federal Health IT Strategic Plan 2015-2020 calls for five broad initiatives to be implemented over the next five years: (i) expanded adoption of health IT across the ecosystem; (ii) advanced and more secure interoperability; (iii) strengthened healthcare delivery systems; (iv) programs to promote greater wellness; and (v) continued investment in research and innovation. Novel solutions will be developed across each of these activities that will result in new company-building investment opportunities.
Analysts estimate that nearly $7 billion of private capital was invested in healthcare IT companies in 2014, nearly double the amount invested in 2013. Of this total, approximately $4 billion was invested in early-stage and growth companies; in fact the top six financings in 2014 raised over $1 billion collectively. Some 376 healthcare technology companies raised capital in 2014, although there were only 7 IPOs, in part a reflection of the sharp decline in some of the public healthcare technology stocks in 4Q 2014. Importantly, according to Rock Health, there were 95 M&A healthcare technology transactions with an aggregate disclosed transaction value of $20 billion. This underscores the encouraging evidence of investor liquidity through increased M&A activity. In particular, there was a strong acquisition focus on population health and care coordination companies; other categories such as consumer digital health and EMR vendors appeared to lag somewhat.Comments | Reprints | Share:
Ben Haugstad is 12 years old and loves Taekwondo. He’s been doing it for six years, and soon he’ll be a black belt.
He also has a severe form of hemophilia. His body doesn’t produce the machinery needed to clot blood, and at any moment a bad tumble or a bruise could quickly turn into an emergency.
Three times a week, his mother Kimberly wakes up in the morning and injects Ben with drugs that, for a short time, help his blood clot. “I never thought I’d be a nurse,” she says.
These shots are expensive, about $2,500 a dose. But they’re also life-saving. They prevent cuts from becoming disasters, and ensure that spontaneous internal bleeds don’t seep into joints or organs and cause serious problems. Ben (pictured above) can live a mostly normal life. He does his Taekwondo, participates in gym class. He’s “private” about his condition, his mother says. He doesn’t talk about it or use it as an excuse to stay home from school and miss a test. He’s only had a little joint damage here and there.
“He wants to do what he can do,” Haugstad says. “We’re actually on a six week run [without a bleed] right now, so I’m pretty excited about that.”
Sometime in the near future, Ben’s tri-weekly infusions might become a thing of the past. With gene therapy, a modified virus carrying specific genetic instructions would be infused into Ben’s body and could give him the ability to clot blood for years, perhaps for life.
You’d expect his mom, the inadvertent nurse, to jump at the thought of it. But Kimberly has a much more measured response.
“When he was born, we heard loud and clear that it was going to be three years to a cure,” she says, and her skepticism is all the more notable because she’s also the executive director of the nonprofit Hemophilia Federation of America. In a sense she’s speaking for a lot of parents, not just herself.
Kimberly has good reason to be wary of promises. The idea of gene therapy for hemophilia has been around since the 1980s, and more than 15 years ago, the first hemophiliacs volunteered for tests. Yet no gene therapy product has come close to market.
Clinical failures and high-profile safety catastrophes in gene therapy trials turned hype to dust, and eviscerated most private investment in the early 2000s. Even with the current resurgence in the field, there are many questions to answer—how long will these therapies last? how safe will they be?—before Ben or any of the 400,000 or so people with hemophilia can count gene therapy as an option.
Disease target: Hemophilia B/A
Name: BAX-335 (for hemophilia B; hemophilia A program undisclosed)
Therapeutic gene: Padua mutant Factor IX
Program origin: Chatham Therapeutics
Status: Initial data from Phase I/II clinical trial of hemophilia B reported in February; more data expected in June
Disease target: Hemophilia B/A
Name: AMT-606 (for hemophilia B; hemophilia A program undisclosed)
Therapeutic gene: Wild-type Factor IX
Program origin: St. Jude Children’s Research Hospital, NIH
Status: Started Phase I/II trial for hemophilia B In early 2015; data expected in the third quarter
Disease target: Hemophilia B/A
Name: Undisclosed; hemophilia A program partnered with Bayer
Vector: AAV, undisclosed
Therapeutic gene: Wild-type Factor IX
Program origin: RegenX Biosciences
Status: Expects to start clinical testing in 2015
Disease target: Hemophilia B/A
Name: SPK-FIX (for hemophilia B, partnered with Pfizer; hemophilia A program undisclosed)
Vector: AAV, undisclosed
Therapeutic gene: Padua mutant Factor IX
Program origin: The Children’s Hospital of Philadelphia
Status: Expects to begin Phase I/II trials in hemophilia B in the first half of 2015
Disease target: Hemophilia A
Vector: AAV, Undisclosed
Therapeutic gene: Wild type factor VIII
Program origin: In-house, St. Jude Children’s Research Hospital
Status: Expects to begin clinical testing in “early” 2015
Disease target: Hemophilia B/A
Strategy: Gene editing via zinc finger nucleases
Program origin: In-house
Status: Plans to submit IND in the second quarter of 2015
Disease target: Hemophilia B/A
Therapeutic gene: Undisclosed
Program origin: San Raffaele – Telethon Institute for Gene Therapy (TIGET)
Status: Potential first trial in 2016
Beyond hemophilia, gene therapy is definitely back. Startups are forming again; some have gone public. Big Pharma is investing via partnerships and strategic alliances. One product is approved in Europe—the first in a Western country—for a rare liver disorder; another might help cure a crippling blood disorder, beta thalassemia.
Gene therapies for hemophilia are farther behind, with just one developer so far, Baxter International (NYSE: BAX), reporting the barest of clinical data. (Xconomy has learned more about those data, which we will describe later.)
Following Baxter are several more companies—see the box at the right—and their clinical progress this year and next should be a touchstone for all of gene therapy. And hemophilia could prove to be the most competitive gene therapy race to date.
“The history of gene therapy really follows the story of hemophilia,” says James Wilson, the head of gene therapy research at the University of Pennsylvania, one of the field’s pioneers and most controversial figures.
Judging by the scrum of companies now with clinical trials or about to start, the story is about to add a wild new chapter. Seven groups have emerged so far with hemophilia programs. They are a mixed bag of big pharma companies protecting profitable franchises and smaller biotechs either working with the big companies or looking to one-up them.
What’s more, there are several scientific approaches and strategies involved, as well as the gamesmanship one might expect from a heated race.
“I think the competition is great,” says Wilson, who is also the scientific founder of the Washington, DC-based gene therapy startup RegenX Biosciences. “You know who’s going to really benefit from this? The patients.”
If it happens, that benefit would be a long time coming—even if patients today are better off than they were a generation or two ago. Until the 1980s, hemophiliacs who bled were rushed to the hospital and infused with a concentrated form of the “clotting factor,” or protein, that their bodies don’t produce: Factor VIII, for patients with hemophilia A, and Factor IX for those with hemophilia B.
Hospital stays could last for weeks or months if the bleed was severe, and patients understandably were overly cautious.
Worse, the infused factors came from donated blood samples and sometimes left hemophiliacs infected with HIV or hepatitis C.
The first breakthrough came when scientists genetically cloned Factor IX in 1982, and Factor VIII two years later. This led to the development of recombinant, or genetically engineered factors. The first was a Factor VIII product called … Next Page »Comments (1) | Reprints | Share:
Former biotech executive Hans Petersen was found guilty of two counts of attempted murder Wednesday in San Diego. One of his targets, the University of California, San Diego scientist Steve Dowdy, says it’s time to move on.
“[It's the] end of a tragic story for us, but we’re not looking back anymore, only forward,” he wrote Thursday in an email to Xconomy.
On the morning of September 18, 2013, Petersen shot Dowdy and realtor Ronald Fletcher in their homes. Both men survived.
Petersen was connected to both his victims in different ways. He and Dowdy (pictured) once founded a biotech startup together. Fletcher is the brother of Petersen’s ex-wife. At the time of the shootings, she and Petersen were estranged and Fletcher was helping her divide the couple’s property, according to prosecutors.
Petersen shot into Dowdy’s bedroom, where he and his wife were sleeping. Dowdy says he was shot in the lower abdomen during the attack, which he recounted during the trial. Later, when Petersen moved on to his house, Fletcher was struck in the abdomen.
By the following June, Dowdy was “pretty much back to normal,” surfing and riding his bike, as he told Xconomy at the time. His wife was unharmed; because of that and of limited evidence that Petersen sought to hurt her, a third attempted murder charge against Petersen was dropped. Dowdy said the two-week trial that just ended was “especially brutal” for his wife.
Dowdy and Petersen helped start Traversa, a San Diego biotech that raised several million dollars in funding but ended up filing for Chapter 7 bankruptcy liquidation in 2012. Petersen was CEO and fired in 2010, according to Dowdy.
Last fall, Dowdy published a paper that described a potential breakthrough in the field of RNAi therapeutics, as I wrote about here. The work could help overcome biological barriers that have kept drug developers from delivering the therapeutics into a wide range of cell types. His work is licensed exclusively to San Diego startup Solstice Biologics, and CEO Lou Tartaglia said when he was hired last June that the company has built its own work on top of Dowdy’s foundation.
Petersen’s sentencing is scheduled for May 15, according to the San Diego Union Tribune. In his email, Dowdy wrote that he celebrated over wine with friends and family, and “we had our first really good sleep last night in a year and half to the day that he shot me.”Comments | Reprints | Share:
Forget Malcolm Gladwell and Tom Friedman. The next great journalist could be a computer program.
Already, artificial intelligence has been put to work at Forbes, the Associated Press, Reuters, and The Big Ten Network. Coverage of NCAA basketball games, earnings reports, and dips in housing prices are regularly penned by this new breed of “journalist.”
And according to Narrative Science’s Kris Hammond, computers are only going to get more creative. Hammond, who’s also a professor of computer science and journalism at Northwestern, believes that artificial intelligence systems can learn to break away from restrictive formulas and absorb subtle linguistic idiosyncrasies. I spoke with him about where he sees AI going.
[This interview has been edited and condensed. For the full conversation, visit innovationhub.org.]
Kara Miller: What will we be able to program a computer to write in the not-too-distant future?
Kris Hammond: Any place where we see data—numbers and symbols—there will now be a possibility of a story. And there is data everywhere. If you wear a Fitbit, there’s data. If you have a Nest in your home, there’s data. If you drive a car, there’s data. But we are living in a world where people have to go to the machine to get data about what’s happening. And they have to figure it out and fight with it. So at Narrative Science, we are building a world where that fighting goes away, and where the machine’s job is to explain what is happening in the world on the basis of the data that it has.
KM: How do you teach an AI system about things like euphemisms, irony, and slang?
KH: You can teach anyone or anything. To teach a system to speak ironically or to generate texts in an ironic form, you have to teach it that it’s another way to express a strong negative opinion. The system needs to learn to amplify the positive so far that it becomes absurd. For example, you have a company that explodes and crashes in record time. And you can say that Company X was the success story of an era. A system will learn irony in the same way that we learn irony, except maybe ever so slightly faster.
KM: Can AI programs break free from things connected to data and write creative texts like screenplays and television shows?
KH: This is something we have looked at on the laboratory side at Northwestern. The question is, can you look at the nature of story and turn it into something that the machine can understand? And I would argue, absolutely. In fact, if you take a look at any screenwriting book, the notion is that movies have the same formulaic feel to them. So if you can identify a pattern and think of how to build up the components and how those components relate to one another, then certainly you can have a machine write creative texts.
KM: Do you think we overestimate the power of creativity?
KH: I think creativity is magical. But, it’s something that can be learned, it can be taught, and it can be trained. And at the very bottom, it’s going to be something stupid. Intelligence is built on a whole bunch of stupid, but then it becomes intelligent. For example, if I teach you the twenty rules for being an umpire at a baseball game, then you can be a great umpire. But it’s based on simple rules. Likewise in creativity, you can teach a machine to be creative.
KM: What is it going to be like when we go to museums and computers have produced our art, or we turn on the television to watch a show that a computer wrote? Does that worry you at all?
KH: I think it’s phenomenal that we will give machines the gift of intelligence, creativity, and awareness. I think building AI systems is like having kids. You want your kids to be smarter than you, you want your kids to be more successful than you, and you want them to be more creative than you. It’s not going to be a horrible world; it’s going to be a magnificent world. Because it doesn’t diminish us to be surrounded by things that are smarter than us. I think we can do better because of machines—we can have a richer world.
Tricia Breton contributed to this write-up.Comments (1) | Reprints | Share:
It used to be that if you referenced a “global engineering team” you had contracted with a few freelance developers in a remote location to do a few hours of work per week. There’s a good reason for that: historically, recruiting, retaining, and growing global engineering teams has been a significant challenge.
At HubSpot, we opened a Dublin office two years ago without plans to develop a full engineering team there, but quickly realized there were plenty of really talented engineers in Dublin and changed course. Over the last two years, we went from having no engineering team whatsoever to having a full team of more than a dozen front and back end developers taking our product game to the next level in Ireland.
A key factor in recruiting and retaining an international team has been recognizing what attracts great engineers, both in Dublin and across the globe. We found these 5 motivations to be universal and are still prioritizing them as we scale:
- Solving Interesting Problems: The best engineers in the world are motivated by solving truly interesting challenges. Particularly for young developers, a strong purpose strongly outweighs any additional perks your company can offer, and yet most companies give their global teams second-rate problems to solve or test and are surprised when they can’t recruit or retain top talent. Our Dublin team has played a pivotal role in the success of our product by driving the HubSpot mobile app, leading the charge on our e-mail tool, and being on the core teams that launched LeadIn and our in-app help tool, Zorse. Building a successful global team starts with presenting developers with interesting challenges and giving them significant autonomy in how best to tackle those challenges on a daily basis.
- Making Every Team a First-Class Citizen: Many dev teams make the mistake of allowing one office to get all the cool, autonomous projects while giving a newer or satellite location less interesting or menial work. They then add insult to injury by sending over some of their weakest team members to train and recruit new folks, which in turn lowers the standard for the entire team. When it came time to launch the Dublin engineering team, we didn’t say we were investing, we showed it. I spent a few months in Dublin getting the team comfortable with our business, software, and culture, and our heads of product took frequent trips back and forth, too. If you’re going global, you need to send a powerful message to your entire team that being an international team is of utmost importance.
- Owning More Than a Business Card: I don’t believe in hiring someone you wouldn’t trust to take the wheel if it came down to it. That applies to any role, in any field, and in any industry. As engineers, we want to work for a company that can give us ownership from day one to decide architecture and operations over a product, feature, or tool. Does that mean nobody on your dev team should ever have to do any grunt work or take direction? Of course not. Engineers have to work on their craft and pull their weight like anybody else, but by giving them the autonomy to own pieces of your product, you’re giving them the freedom to develop their skills while showing them you trust them.
- Working for Managers That Are There to Serve: A world-class team is only as good as its managers. Being a servant leader is a difficult but crucial role for managers to play. They need to push the team to innovate, stay on track, and produce disruptive results, but at the same time, they can’t be in charge. Great managers work for their employees by enabling each and every engineer to GSD. We have to block and tackle for our talent, and work with them on an individual level so that unique skill sets get the attention they need to grow. Engineers already have a coveted talent, but they’ll pick the company that works to provide an environment for them to develop it. Managers, that’s on you.
- Shipping at the Perfect Pace: One of our favorite things to tell potential candidates in the recruiting process is that we ship code 300 times a day because it speaks for itself. The best developers, product managers, and engineers in the world want to build something meaningful. Instead of frustrating bureaucracy, they want to break through barriers, knock down walls, and ship code that will transform a product or an industry.
Out west this week, Bay Area clinical data carried the day. Nektar got bad news from a Phase 3 breast cancer trial, but Pharmacyclics, about to become (a very expensive) part of AbbVie, kept rolling with lymphoma/leukemia data so good that reviewers voted to release it early. Vancouver was also abuzz, as Bill Gates spoke at a TED conference there about the need for better epidemic preparation. In cancer immunotherapy news, Kite Pharma expanded into Europe, while Juno reported earnings—or more accurately, spendings—for the first time. You don’t have to spend a dime; our roundup is free, as always.
—Nektar Therapeutics (NASDAQ: NKTR) of San Francisco said Tuesday that its experimental breast cancer treatment etirinotecan pegol failed to hit its main goals in an 852-patient Phase 3 study. The drug did not boost overall survival in a statistically significant way compared to patients receiving a chemotherapy agent of their physician’s choice. Nektar shares fell 15 percent Tuesday.
—Sunnyvale, CA-based Pharmacyclics (NASDAQ: PCYC) made its buyer AbbVie (NYSE: ABBV) very happy on Monday with good clinical news about its flagship product ibrutinib (Imbruvica), which is already approved in four cancer indications. A review panel recommended unblinding Phase 3 results early in a trial for patients with chronic lymphocytic leukemia and small lymphocytic lymphoma. AbbVie has agreed to pay about $21 billion for Pharmacyclics in cash and stock.
—Bill Gates gave a TED talk in Vancouver and wrote in several places, including his own blog, about the lack of preparedness for the next epidemic infectious disease. The Bill & Melinda Gates Foundation pledged $50 million to fight Ebola last September.
—Kite Pharma (NASDAQ: KITE) of Santa Monica, CA, bought Dutch firm T-Cell Factory to expand its T cell receptor cancer therapy platform and to acquire manufacturing space. Kite is initially paying up to $21 million in cash and stock, and it will rename the group Kite Pharma EU.
—Juno Therapeutics (NASDAQ: JUNO) reported earnings for the first time since its December 2014 IPO, with nearly $200 million in net losses for the full fiscal year. Roughly half its R&D expenses for the year ($182 million) was cash payouts to the research institutions that developed much of Juno’s technology. The spending should continue, as the company should have 10 clinical programs in the next 12 months, according to a statement. It estimates $125 million to $150 million in cash burn in 2015.
—After closing on $42 million in private funding last month, San Diego’s Cidara Therapeutics plans to raise as much as $69 million through an IPO, according to a recent filing. The cash will help advance its anti-fungal products, including lead candidate CD101 as both an intravenous treatment for systemic fungal infections and a topical treatment for vaginal yeast infections.
—South San Francisco, CA-based Second Genome on Friday signed a collaboration deal with Germany’s Evotec to do small-molecule discovery work based on Second Genome’s research in diseases mediated by the gut microbiome. No financial details were disclosed.
—Palo Alto, CA-based digital health firm Glooko said Tuesday it has raised a $16.5 million Series B round from Canaan Partners and others to expand its diabetes management system.
—Richard Scheller, the new head of therapeutics at 23andMe in Mountain View, CA, has also joined the board of directors of Xenon Pharmaceuticals, a Burnaby, BC-based firm looking to develop drugs based on insights into rare genetic conditions.
—Tekmira (NASDAQ: TKMR) of Vancouver, BC, said Wednesday it would sell 6 million shares in a secondary offering, with an underwriter option to buy up to 900,000 more shares. The shares have not yet been priced.
—Santa Rosa, CA-based pharma company Ruthigen (NASDAQ: RTGN) is merging via stock swap into privately held Pulmatrix, of Lexington, MA, to give Pulmatrix access to Ruthigen’s public listing. The combined company will keep the Pulmatrix name and focus on development of Pulmatrix’s inhaled therapeutics.
—Israel’s Teva Pharmaceutical Industries has agreed to sell four of its clinical cancer programs to San Diego-based Ignyta (NASDAQ: RXDX) as part of a stock purchase agreement with an overall value of $41.6 million. Teva also agreed to buy an additional 1.5 million shares of Ignyta at $10 per share. Ignyta is focused on developing companion diagnostics-and-drug programs for the emerging field of precision medicine.
—San Diego-based Accriva Diagnostics Holdings, formed from the 2013 merger of San Diego’s Accumetrics and New Jersey’s ITC Nexus Holdings, has raised almost $15.5 million of a planned $18.9 million round of equity funding, according to a recent filing. The company makes diagnostic products, including a device used in hospitals and clinics to measure a heart patient’s response to anti-clotting drugs.
—San Diego-based Banyan Biomarkers, which is developing a point-of-care blood test to detect signs of traumatic brain injury, has raised $1.8 million from investors in a planned $5 million round, according to a recent filing. The company, founded in 2002 with technology from the University of Florida, moved to San Diego before enrolling 2,000 patients in a pivotal clinical trial funded by a $26.3 million contract from the U.S. Department of Defense. Those results are expected by the end of this year.
Xconomy San Diego editor Bruce V. Bigelow contributed to this report.
Image “Fall in Vancouver” courtesy of JMV via a Creative Commons license.Comments | Reprints | Share:
Crisp statements of a case to a prepared, if skeptical, mind have often changed the history of innovation. Perhaps the most critical example of this in the 20th Century is the memorandum that reached Sir Henry Tizard, chief scientific advisor to Britain’s Air Ministry, 75 years ago today, on the 19th of March, 1940. This document, signed by refugee physicists Otto Frisch and Rudolph Peierls, thrust open a contentious transatlantic path to President Franklin Roosevelt’s decision in October 1941 to launch an all-out program to beat Hitler to an atomic bomb.
The way that Peierls and Frisch framed the issues crystallized the fears that had swirled among the world’s nuclear physicists for more than a year. The possibility of a bomb arose as soon as two chemists in Berlin, Otto Hahn and Fritz Strassman, discovered in December 1938 that uranium atoms could split, or fission, into roughly equal halves. This unexpected process released an immense amount of energy along with surplus neutrons to keep a chain reaction going. Frisch, with his aunt Lise Meitner (formerly Hahn’s colleague), had promptly published the first interpretation of the findings, including the name, fission.
Many had hoped that an atomic explosive would not be practical. But now, Tizard read the few typed pages transmitted to him by a feisty Australian physicist named Mark Oliphant, who had found jobs in his University of Birmingham lab for both Peierls, a Berliner, and Frisch, a Viennese. They had both fled Germany in 1933, when Hitler came to power. Looking at the issues in a new light, the two asserted that an atomic bomb was possible if you could 1) build a factory to separate just a few pounds of pure uranium 235, a rare isotope of uranium; 2) suddenly jam together a “critical mass” of it; and 3) confine it just long enough to produce an explosion equivalent to a thousand or more tons of TNT. They said the uranium 235 bomb would annihilate defenses, kill thousands of people, and bathe a vast area with lethal radioactivity.
Peierls had been in England for seven years. Frisch had started out in England before spending five years in the world-famous physicist Niels Bohr’s institute in Copenhagen. Good fortune brought him to Mark Oliphant’s lab at Birmingham shortly before Hitler’s tanks and dive-bombers smashed into Poland on Sep. 1, 1939. As citizens of Hitler’s Reich, the two were barred from war work despite their expertise.
Reading their words, Tizard at once contacted a leading physicist, G.P. Thomson, and instructed him to form a committee to test the assumptions Frisch and Peierls had stated so starkly. The committee began meeting in April 1940 and granted modest sums to research groups in Oxford, Cambridge, Birmingham, and Liverpool. Soon, Frisch and Peierls protested being cut off from their own work and were brought in as consultants.
To solve the central problem—separating uranium 235 from the much more abundant uranium 238—Frisch suggested recruiting refugee, Franz Simon of Oxford, who had already started exploring how to press a uranium gas, uranium hexafluoride, through ultra-fine metal membranes. The resulting lighter gas, uranium 235 hexafluoride, could gradually be “enriched” in a cascade of thousands of stages. The British committee managed to keep everyone talking freely to each other, summarizing conclusions clearly after frequent meetings.
The committee sent its minutes faithfully across the Atlantic to a corresponding group in America. That U.S. committee had been set up after Einstein’s famous letter to President Roosevelt in the fall of 1939 (the letter warned that uranium could split with a huge release of energy, that the discovery had been made in Germany, and that the Germans were showing acute interest in uranium supplies), but its chairman simply locked the British reports in his safe. Compounding the problem was the unfamiliarity of the two top U.S. war science bosses, engineer Vannevar Bush and chemist James Conant, with nuclear physics. Finally, in the summer of 1941, Conant was told in stark terms of a bomb that could obliterate a city—and that Hitler might get it first. Shortly thereafter, a Harvard chemist whom Conant trusted, George Kistiakowsky, told him after studying the matter that he was “100 percent sold” the bomb would work. Frisch and Peierls’ point was finally getting action.
Moving swiftly now, Bush took the matter to Roosevelt on Oct. 9, 1941. The President seized control instantly. Seeming to take the decision for a crash program for granted, FDR focused on postwar control and securing a good supply of uranium. He would find the money.
Less than three years after the table top discovery of fission in Berlin, the U.S. actions paved the way to beating Hitler to the bomb, and the world was on its way into the nuclear age.
[Editor’s Note: This is the fourth of an envisioned series of notes about major anniversaries in innovation and what they teach us. You’re invited to suggest other milestones of innovation for in the Xconomy Forum. Example: This year will mark the 150th anniversary of Alexander Holley’s pilot plant in Troy, New York, for making steel by the Bessemer process.]
Jeremy Bernstein, “A Memorandum that Changed the World,” American Journal of Physics, Volume 79 (number 5, May 2011), pages 440-446.
Richard Rhodes, The Making of the Atomic Bomb, Simon and Schuster, 1986 ISBN 0-671-44133-7.
Margaret Gowing, Britain and Atomic Energy, New York, St. Martin’s Press, 1965.Comments | Reprints | Share:
The Kyoto Prize Symposium is now in full flower in San Diego, highlighting Japan’s highest international award for honoring the people who have made significant contributions to the scientific, cultural, and spiritual betterment of mankind.
The Kyoto Prize was first awarded in 1985, and for many it has become the most prestigious award available in fields that are not traditionally honored with a Nobel Prize. It also has become the only major international award with celebrations in two different hemispheres.
At an elaborate ceremony in Kyoto, Japan, on November 10, the three 2014 Kyoto Prize Laureates received their formal honors, which include a diploma, a 20-karat gold Kyoto Prize medal, and a cash award of 50 million yen (about $416,000 at the current exchange rate). The Kyoto Prize Laureates convened again in San Diego for a symposium that began yesterday and features free public lectures by three of the foremost scientists, engineers, and artists of our time.
As part of the celebration, I got an opportunity to put a few questions to Robert Langer, an Institute Professor at MIT (and a Boston Xconomist and prolific entrepreneur), who received the 2014 Kyoto Prize in Advanced Technology. The Kyoto Prize in Basic Sciences was awarded to Edward Witten, a theoretical physicist at Princeton’s Institute for Advanced Study; and the Kyoto Prize in Arts and Philosophy went to 89-year-old Fukima Shimura, a textiles artist best known as the creator of the tsumugi kimono.
Langer, 66, was cited as a founder of the field of tissue engineering, and for pioneering methods that use biodegradable polymers to form “scaffolds” upon which new tissues and even organs can be grown. Langer’s Kyoto Prize also notes his development for innovative and unique drug delivery technologies for the controlled release of medicines to directly target tumors and disease sites. Langer’s 2014 Kyoto Prize Commemorative Lecture in Advanced Technology is here.
Here is a condensed transcript of our conversation:
Xconomy: Was the Kyoto Prize awarded in recognition of your body of work, or was it for a particular accomplishment?
Robert Langer: I don’t know for sure because I wasn’t involved, but my sense from reading what they wrote was that it was for the body of work in drug delivery and tissue engineering… We’ve probably done a little more on drug delivery. Largely, what we’ve done is create new biomaterials for many different things, for drug delivery systems, nanotechnology, ways of creating new tissues and organs, and other things.
X: Could you sketch out some of the likely areas of innovation that you see in both drug delivery and in tissue engineering?
RL: In drug delivery, I think some of the really exciting things are in the area of nanotechnology, particularly with respect to enabling new kinds of drugs to be broadly useful… For example, delivering siRNA, delivering mRNA, some of the gene editing approaches. That’s one of the very, very exciting areas—targeted drug delivery and using nanotechnology to get the drug into your cells.
Other areas that are very exciting [involve] smart delivery systems. One example that we’re involved with is creating these intelligent microchips that can be put in the body, and someday have sensors on them, so they can deliver drugs in response to specific signals in the body.
A third area is what I call non-invasive delivery. Could you deliver large molecules or more complex molecules, by the oral route or the trans-dermal route, or pulmonary route? All those things are very exciting.
Finally, [an area] I think is very important is extending the kinds of things we’ve done in new ways for the Third World. Could you, for example, improve patient compliance by … Next Page »Comments | Reprints | Share:
Microsoft opened its Office suite to play with other cloud services, Box debuted on Wall Street, and Google reinvented the inbox. Not even three months into 2015, and we’ve already had several interesting developments in the online collaboration software market. Here’s how these announcements fit into trends we’re seeing at Smartsheet.
Consumption-Based Pricing Eats Per-User Pricing
The days are numbered for seat-based enterprise software licensing and negotiating enterprise agreements that don’t include consumption metrics. I chuckle every time I get an e-mail from a company called Software Licensing Advisers inviting me to a workshop called 2015 Microsoft Licensing and Negotiation Workshops: Seattle—Become a Microsoft Licensing Expert and Negotiate Better Deals with Microsoft. Why would I need a workshop to negotiate my licenses? Likely because I lack the transparency in my software usage to understand what features and functionality I need.
The availability of Microsoft O365 marks the tipping point for software pricing. Now that it’s possible to see actual usage online, they prices are under the same “active users” microscope as all the other SaaS tools that are routinely graded on usage, not just seats sold.
The rest of the megacaps are now officially on notice.
Smartsheet customers simply true-up their license every quarter based on the actual use. Usage of the tool spreads virally as people collaborate and active use is transparent, so we rarely speak with a CIO who doesn’t have hundreds or thousands of active users to set the value.
App Fatigue Creates a Backlash Against BYOA
For the past couple years, mobile devices and apps have been the Wild, Wild West, as the bring-your-own trend swept the enterprise, while the core services we grew up on such as Microsoft Office made their move to the cloud. The BYOD and BYOA trends have been a great thing. Letting employees choose their own apps has enabled enterprises to internally crowdsource future solutions in productivity. But like too much of any good thing, the BYOA pendulum has swung too far.
Today 78 percent of employees (PDF)are managing their work on their own devices, using a mix of personal and company-purchased apps. The average information worker routinely uses six to10 apps, which can create silos of work separating teams, departments, vendors, and clients.
Now the apps proliferation has crossed the Rubicon and needs to be reined in. What if a project manager moves content from a company Google Drive account and puts it in their personal Box? Who owns the content then? These blurred lines are causing IT to struggle with balancing their security concerns with employees’ need for choice and immediate return.
This year companies will start to consolidate around the core apps that have the best and broadest adoption.
E-mail Not Only Survives, but Thrives
For years we’ve vilified e-mail as the great productivity sink, but it’s one of the few tools that has evolved to work seamlessly among everyone, regardless of platform or device.
If executed well, e-mail makes our apps more useful. All the apps we install will continue to notify us via e-mail, and the apps that don’t talk to each other directly will still force us to talk with each other via e-mail.
Plus, there are some exciting new advancements in e-mail. Microsoft is upping the ante with the recent release of Outlook for Android and iOS mobile devices. While this is partly due to their acquisition of Acompli, it’s also a step towards delivering on Microsoft CEO Satya Nadella’s “cloud first, mobile first” strategy.
The world’s biggest e-mail service, Gmail, is seeing big changes as well with their introduction of Google Inbox. New Assists, Bundles, and Now Reminders all are designed to help you sort, find, and deal with e-mail faster.
Needless to say, with these types of investments, e-mail as we know it is in for some big changes, and will continue to be the one tool that binds us all.
Visualizing How Work Gets Done Will Become Central
Managers are feeling the pressure to keep track of who’s doing what with whom and where projects stand. It’s driving the need for visualization tools that can illustrate the big picture in simple ways.
A new report by the late tech industry news and analysis site GigaOM describes the value of combining people, work, and content in a visual framework that uncovers valuable insights about the patterns of work collaboration. Not only is it possible to graphically depict project status, you can now identify patterns in team collaboration, visualize hubs of activity, and identify who the top performers are. This view of work is unprecedented.
Visualizations will be particularly helpful in understanding how employees collaborate with external partners. Our customers have discovered that 35 percent of people contributing to their projects are actually outside the company domain. Being aware of this, and having the ability to audit and control this collaboration, is a godsend to CIOs.Comments | Reprints | Share:
The largest U.S. maker of lightweight, multi-rotor drones and unmanned aerial systems is looking to substantially expand its commercial business—targeting companies that want to use drones to inspect railways, monitor construction sites, and for all sorts of other things.
After raising $50 million late last month, 3D Robotics is at a watershed moment made possible by the FAA, which is now allowing small-drone commercial operations in the United States for the first time, according to Andrew “Max” Maximow, the company’s San Diego-based director of client services. Anticipating the opportunity, the Berkeley, CA-based company has expanded to 300 employees, and rearranged some of its operations in San Diego, Tijuana, and Austin, TX.
Rules for the use of large unmanned aerial vehicles (UAVs) in U.S. airspace have been in place for years, allowing remotely operated flights by certain agencies and qualifying universities for such duties as environmental monitoring and disaster relief. The U.S. Border Patrol, for example, has been routinely flying General Atomics’ Predator along the U.S. border with Mexico for at least a decade.
Now, under a proposal unveiled in mid-February, the FAA has drafted a new “framework of regulations” for the commercial use of drones weighing less than 55 pounds. Before the regulations are finalized, though, the agency has been testing the water, so to speak, by creating an exemption that allows the commercial use of small drones in civil airspace on a case-by-case basis.
The FAA says more than 650 petitions for such exemptions have been filed over the past 10 months.
So far, the agency has granted at least 48 requests, including a Tucson, AZ, realtor who wants to fly a DJI Phantom 2 quadcopter to provide aerial footage of local real estate listings, and an application from Illinois’ Commonwealth Edison, which plans to use a DJI Innovations S900 to monitor electric transmission lines and distribution systems. On Monday, State Farm announced it is the first insurer to get FAA authorization to operate unmanned aerial systems for commercial use. The Bloomington, IL-based insurer plans to use drones to assess customer claims of roof damage and in natural disasters.
The FAA also has approved requests to use drones in closed-set filming for the motion picture and television industry, and for use in agricultural surveys and mapping. Only certified pilots can operate the drones under the FAA’s special authorization, which sets a variety of other restrictions on commercial, small drone operations.
At 3D Robotics, Maximow said an initial focus on agricultural uses for drones has given way to a surprising array of opportunities in unexpected markets. Last week, for example, the FAA approved requests from the BNSF Railroad and Los Angeles-based Build Imagery to use drones made by 3D Robotics.
The Texas-based BNSF Railroad approached 3D Robotics “out of the blue,” Maximow said, for help in using drones to conduct regular railway infrastructure inspections. The railroad, which operates the second-largest rail network in North America, wants to use 3DRobotics’ new Spektre industrial multi-rotor drone and two models from Germany’s AirRobot to conduct regular inspections of railway infrastructure and rights of way.
“I think they looked to us as an innovation partner to meet their needs and requirements,” Maximow said. Federal regulations mandate weekly inspections that are currently done by employees in railway-mounted vehicles, and Maximow said, “They need that eye in the sky to get their employees off the track.”
At the end of February, 3D Robotics CEO Chris Anderson offered a sneak peek of the Spektre, which is still under development. With a lightweight carbon-fiber frame, the Spektre weighs less than 20 pounds and can be outfitted with as many as eight propellers. It is intended to serve as a multi-function “truck” in a variety of heavy-duty roles, Maximow said.
— Chris Anderson (@chr1sa) February 26, 2015
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The petition filed by Build Imagery was unknown to 3D Robotics until the FAA approved it on March 11th, Maximo said. The firm proposes to … Next Page »
[Corrected 3/17/15, 7:55 pm. See below.] The phrase “better living through chemistry,” derived from an old DuPont corporate slogan, has accumulated all kinds of ironic and wink-wink connotations over the decades. But there’s a fascinating revival and upgrade underway.
For people with debilitating mental health problems, many researchers, doctors, and businesspeople think the new phrase should be “better living through chemistry and digital technology.” OK, it’s clunky, but it helps describe a range of new digital therapies—delivered via mobile apps, desktop or TV-based games, and even immersive virtual reality—under development for mental health and addiction disorders that thousands of patients have already used.
As I wrote last fall, digital solutions to health problems have a lot of promise—and a lot of hype—but only a few have produced evidence that they improve patients’ outcomes.
In mental health, most digital therapy—and most of the evidence in its favor—has been found in research labs, not in traditional rigorous clinical trials, at least not the kind that new drugs generally have to go through for approval.
“We are taking some things developed in university clinics and test driving them in large HMOs, but we’re still grappling with the problem of when something has enough evidence,” says Farris Tuma of the National Institute of Mental Health’s division of translation research and a specialist in post traumatic stress disorder. “A lot of entrepreneurs don’t like this process, they say it stymies creativity.”
But some developers of experimental digital therapies welcome clinical rigor behind their products. “We’ve seen positive signals in the academic literature. We wouldn’t be here if we didn’t,” says Eddie Martucci, the chief operating officer of Akili Interactive Labs, a Boston startup founded by PureTech that is building video games to treat autism, attention-deficit hyperactivity disorder, depression, and traumatic brain injury. “But at this point we want to take those positive signals to the next level in large controlled clinical studies.”
Those clinical studies, says Martucci, will ultimately point Akili toward the best uses for its video game platform, called Project: Evo. (The startup Sync Project, also founded by PureTech, wants to build a clinical backbone into claims that music is good therapy.)
Claims that apps, games, and other digital products improve brain and mental health will be scrutinized intensely. Online brain-training games, for example, are under fire for making claims without scientific backing, with a long roster of scientists signing an open letter last fall to protest the way the products are promoted.
But for digital therapies aiming to stand alone or to augment pharmaceutical treatments, what will the standards be? Patrick Kennedy, a former U.S. Congressman from Rhode Island and now a mental health advocate, says regulators are lagging behind the facts on the ground. Combat veterans with the “invisible wounds” of PTSD, people with addictions, and others can’t wait for the bureaucracy to set new evaluation standards.
“We need regulatory agencies, the federal government and the Congress to respond to an urgent need,” says Kennedy, who sees a parallel to the 1980s, when activists forced the conservative FDA to allow trials of drug cocktails to treat HIV.
Kennedy, the son of former U.S. Senator Ted Kennedy, knows the regulatory and political system, has battled his own substance abuse and bipolar disorder, and is a cofounder and director of the mental health advocacy group One Mind for Research. “Multimodal therapies,” combining drugs, digital programs, and other services, are “the new end points” that the FDA needs to develop, which is why Kennedy is putting his weight behind Pear Therapeutics, a startup based in Boston and San Francisco. (Kennedy is chair of the advisory board, and another Kennedy, Stephen Kennedy-Smith, is the company’s EVP of corporate development.)
Pear’s business plan shows how a company that doesn’t want to wait for regulatory enlightenment has to proceed with drug-software combinations. Pear initially wants to marry academic work on digital therapies with old, generic pharmaceutical warhorses— a selective serotonin reuptake inhibitor for depression, benzodiazepine for anxiety, and zolpidem (a.k.a. Ambien) for sleep disorders, for example—and create new combination products that Pear is calling ‘eFormulations.’
[Correction: This paragraph has been changed to clarify the ownership of the addiction program and the number of trials the addiction program has been through.] CEO Corey McCann says Pear is farthest along with an addiction product and one for combat-related PTSD, where the bodies of evidence for the “drug-software synergy” are most promising. The digital therapy program for addiction, for example, … Next Page »Comments | Reprints | Share:
Part of the value pitching in a competition at South by Southwest is getting to speak to a room packed with potential investors and users. But winning, and the prizes that come with it, never hurts.
First place: Admetsys
Prize includes: first round interview at Entrepreneurs Roundtable Accelerator; slots in two other accelerators; credits for services from Microsoft and Amazon; entrepreneur office hours
—Admetsys has developed a glucose control system for diabetic patients. It is an automated system, which the company calls an artificial pancreas, and is designed to reduce the amount of time patients spend in hospitals, says CEO Jeff Valk. The Boston-based company has completed three FDA-approved clinical trials, though it is still waiting for pivotal data because it does not have its final device yet, Valk says. It expects that device to be ready in September.
Second place: Astroprint
Prize includes: first round interview at Entrepreneurs Roundtable Accelerator; credits for business services from Microsoft and Amazon; entrepreneur office hours
—Astroprint allows 3-D printer users to store their files in the cloud and send them to their printers via a simple interface on a phone, tablet, or computer—with no complicated software to install. The company expects the majority of its business to target the consumer market, though it has been approached by multiple 3-D printer lines, and would “follow the money” if the consumer market is slower that expected, CEO Drew Taylor says.
Third place: Plum
Prize includes: first round interview at Entrepreneurs Roundtable Accelerator; credits for business services from Microsoft and Amazon; entrepreneur office hours
—Plum makes a software-enabled light switch—call it a smartswitch, if you will—that works like a touch screen on a smartphone. Swipe up with a single finger to turn a light on, use two fingers to control all lights in the room, and pinch to turn off all the lights in the house, says CEO Utz Baldwin. Austin, TX-based Plum has a free app that lets you also control the device remotely. The system costs $99 ($89 currently for preorders), Baldwin says.
Audience award and Prezi award: Procyrion
Prize includes: first round interview at Entrepreneurs Roundtable Accelerator; lifetime access to Foundersuite; a wearable tech band that reads a person’s muscles to control the device
—Procyrion is a Houston medtech startup that develops a circulatory support pump that is thinner than a pencil and can be … Next Page »